Venezuela breaks diplomatic relations with Panama

Venezuela’s president Nicolás Maduro has severed diplomatic relationswith Panama, accusing the country of being a “lackey” for the UnitedStates in a conspiracy against his government. According toMaduro:

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There are maneuvers by the U.S. government plottingwith a lackey government that has a right-wing president who isleaving in the next few months, who is not worthy of his people,who has been working actively against Venezuela.

The expulsion was triggered by a Panamanian request for a meetingof the Organization of American States (OAS) to discusssolutions to the unrest and violence in Venezuela. Madurosaid: “Nobody will conspire with impunity to ask for anintervention against our fatherland. Enough!”

Maduro expelled three U.S. diplomats recently on accusations ofrecruiting students to hold violent, rock-throwing protests againsthim. Washington has rejected the claims as baseless. But Maduro isdesperate to blame anyone he can for the disastrous economic situationin his country, which continues to worsen, especially since the deathof his predecessor, Hugo Chávez. The inflation rate, at 56%, is thehighest in the world. The murder rate is 25,000 annually, one of theworld’s highest per capita rates, and 97% of the murders gounpunished. The supermarket shelves are bare, with shortages ofeverything from toilet paper to vegetables. Anti-government protestshave been getting larger and more violent for a month.

However, Maduro’s move may simply be a way to get out of payinga debt. Venezuela owes Panama about $1 billion, mostly fromdebts incurred related to use of the Panama Canal, andfor COPA, the Panamanian airline.

According to Panama’s president Ricardo Martinelli:

I don’t want to think that this is an excuse not topay and that the Venezuelan state is a deadbeat.

Venezuela would appear to be bankrupt, although it shouldn’t bebecause it is a very rich country.

Martinelli suggested that despite breaking diplomatic relations,Venezuela “has no excuse” to not pay off its debts. Russia Today and CNN and AFP

Russia escalates the conflict over Ukraine’s Crimea region

Russia escalated the conflict over Ukraine’s Crimea regionboth politically and militarily on Friday. In doing so,hopes that the crisis might end soon seem very unrealistic.

Although Russia still refuses to admit that there are Russiantroops in Crimea, it was clear that Russian troops weretightening their grip within Crimea:

Russian troops have been blocking Ukrainian military bases and demanding to take control.

While the Russian troops were “negotiating” with the Ukrainians at one military base, pro-Russian militias showed up and beat up journalists who were trying to report on the event.

Russia’s Navy warships sank two boats in Sevastopol harbor in order to blockade Ukrainian ships and prevent them from leaving.

On the political front, there’s been a lot of euphoria in Moscow afterthe Crimean parliament voted to secede from Ukraine and join Russia and to hold a referendum on March 16. Russia is making plans to annexCrimea and Sevastopol as new members of the Russian Federation. Itwas announced that on March 21, the Duma will vote for aconstitutional amendment to allow for the annexation of Crimea, makingit the first addition to Russia since the breakup of the Soviet Union.

It’s only been a few days since Russia’s president Vladimir Putinpromised not to “consider” annexing Crimea. That promise wasbroken within two days by fast-moving events.

Three days ago, Russian troops that had been performing militarydrills along the border between Russia and Ukraine for several dayswere recalled to their barracks. As I wrote at the time, this was considered such good news that WallStreet was sent into a bubble-happy frenzy, pushing stocks upparabolically.

But in fact, something similar happened in 2008. There were massivemilitary maneuvers on the border with Georgia, leading to fears thatRussia was about to invade Georgia. Everyone breathed a sign ofrelief when the military exercises ended on July 31. But the invasionof Georgia began only eight days later on August 8. If Russiafollows the same pattern, then a full-scale invasion of Ukraine may beonly a few days away. CNN andBBC andJamestown